The debt supermarket

It’s no secret that in Britain we have quite a love hate relationship with debt. There’s £1.3 trillion of it being paid back in one form or another. Having debts is not necessarily bad, just paying for over the odds for it is. Many companies make huge profits by people not being careful enough about the debts they take out, and ignorance of potentially better deals.

Effectively, the lower the APR and the faster you can pay off debt, the better. It is also possible to manipulate periods of 0 per cent debt so that you effectively pay nothing from your own finances for certain purchases, although this takes a certain amount of skill and timing. Loans, credit cards and mortgages are a huge market, so here are some of the best deals that can save you money.

Credit cards

If you’ve had a credit card for a long time, then it’s more than likely that you are not getting a good deal, and almost certainly not the best. Most credit cards have long bonus periods on them that mean you don’t have to pay for your debt. There are many options for debt consolidation, but a good option for 0% credit cards is ASDA Finance, or another supermarket if you regularly shop there. Both ASDA and Tesco’s offer credit cards with sizeable 0 per cent on balance transfer options (for nine and thirteen months respectively) and both offer 0 per cent on purchases for three months. If you have outstanding credit card debt, then it’s well worth conducting a balance transfer, as it means you could go from paying an average of 15 per cent to 0 per cent over the bonus period.

Loans

As loans usually have a smaller APR than credit cards, but you’ll be able to borrow more, typically £7,500 to £25,000. The better your credit rating, the better your chance of getting an advertised rate – a lot of companies advertise at under seven per cent, but the customers who usually get accepted for this have an excellent credit rating. If you have a poor credit history, or missed a number of payments over the last year, then you should consider going for a higher rate, or get someone to recommend you a rate. If you go for a lower rate, then you will more than likely be rejected, and this will negatively affect your credit score. For homeowners, even people who have adverse credit ratings and CCJs can get accepted for secured loans, because these are guaranteed against the value of your property. If you think you may have difficulty repaying a secured loan, however, you should absolutely not take it out, because you run the risk of losing your house. For more on unsecured loans and homeowner loans, take a look at ASDA Finance.

Mortgages

Mortgages account for over 80 per cent of the UK’s debt mountain, and they’re the biggest sum of debt that many of us take out during our lifetime. With that in mind, it’s absolutely essential that you get the right deal, because you will more than likely be paying it off for twenty years or more – so that’s a lot of interest! There are also thousands of mortgage deals out there, which makes the whole process more than a little confusing. If you’re looking to refinance or take out a mortgage, you should consider getting some independent advice, other than your regular bank. See the Motley Fool for more information on mortgages, or take a look at Natwest for an instant quote on a selection of mortgages.